South Dakota to eliminate property taxes?

By Aaron S. Robertson

Lately, there have been conversations taking place in South Dakota on how best to reign in rising property taxes. Various ideas and proposals being floated by lawmakers, candidates for public office, the general public, and your family members around the kitchen table include calls for either a significant reduction in property taxes through one or more means, or even an outright elimination. With the state having no income tax in place, many of these conversations appear to favor some sort of increase in sales taxes in exchange for a reduction or elimination of property taxes.

I'm genuinely interested in seeing where these discussions go. I tend to fall more on the elimination side - let's do away with property taxes altogether, if it's feasible. Now, I'm a realist. I'm reasonable. I know that in order to fund and maintain high-quality public services, amenities, and infrastructure, I'm going to have to pay tax in some form or another. I, personally, am therefore willing to pay more in sales taxes, knowing that my family will save significantly on the property tax side. And I believe it's fair and reasonable to place that tax I'll have to pay on my consumption and use. Why place such a heavy burden on property owners and would-be property owners? We want to encourage and nurture home ownership. Ownership of real property is economic security. And that's good for families, neighborhoods, and broader communities. It's good for building generational wealth and opportunity for all. And the state, so far, has fallen on the right side of not punishing income. Hopefully, South Dakota can continue that trend.

What follows, then, are just a few of my points for eliminating - again, if feasible - property taxes altogether, in exchange for an increase in sales taxes. I'm just one South Dakota resident trying to contribute, in good faith, to the debate, which is certainly worth having. Hopefully, we can collectively come up with some viable solutions for the good of the people of South Dakota at the end of all this. That's all that matters - real solutions for the good of the people of South Dakota.

The sales tax will capture the contributions of tourists, business travelers, international students, convention goers, and local residents who currently do not own real property. So long as the state and local communities within the state - especially Sioux Falls, by far South Dakota's largest city and economic engine - can continue to fund and maintain its exceptional parks, pools, trails, natural resources, and other amenities and attractions, South Dakota will have no problem enticing travelers of all kinds. We know that the Sioux Falls Regional Airport (FSD) is about to receive a good-sized expansion, and rightfully so. The demand is there.

Now, classic arguments maintain, and understandably so, that an increase in sales tax in exchange for a reduction in, or elimination of, property taxes, will negatively impact those who currently do not own real property, as well as lower-income households. However, it is worth exploring and debating the flip side to this coin, namely that the elimination of property taxes can spur home ownership by promoting greater home affordability. It's attractive for both lenders and would-be home owners when property taxes no longer need to be part of the equation; as well as for elderly on fixed incomes and families that have unfortunately fallen on hard economic times and are merely trying to remain in their homes. Savings from property taxes can be used for home/property improvements, or invested elsewhere, or saved in emergency accounts, as just a few examples. It's their money to use as they see fit.

What about the opportunities that become unleashed if we were to expand such a theoretical program to commercial property taxes? The jobs that will be transferred to and/or created right here in South Dakota on account of businesses being able to save on property taxes?

If we can eliminate property taxes outright in South Dakota - wow, what a powerful marketing campaign we'll have at our disposal to attract and retain top talent, jobs, opportunity, and a construction boom. We'll be able to rightfully say to the rest of the country that we have no state income tax, no property taxes, and, at least for now (until the population boom eventually requires it), no vehicle emissions testing. All this for the cost of a reasonable sales tax that is managed and spent efficiently. And if we can successfully pull this off, South Dakota will truly stand as a model for good, solid governance before the rest of the country. That's the beauty of our system of government - states can learn from one another, and the federal government can learn from the states. Individual states can lead the way in innovation through their experimentation and testing.

Aaron S. Robertson is a teacher and tutor in Sioux Falls, South Dakota, as well as the publisher of the Mr. Robertson's Corner blog for students, families, and fellow educators. Prior to entering the profession of education in 2018, Robertson worked in the world of business, holding a variety of roles in the private sector, including a stint as a small business owner. He holds a bachelor's in political science with minors in sociology and philosophy, and a master's in management. Additionally, he completed significant doctoral work in the area of leadership. All views expressed here are strictly his own.